Money comes and goes, but it feels like debt is always with us. It’s something that I know most people would like to change. It can be confusing though, when trying to juggle bills while paying off bills. What should we pay off first? Here is how we dealt with debt as a family.
Perhaps it’s a twenty dollar tool bill at work or an arrears balance in our health care. Paying off little items often goes a long way financially. We may only have to pay twenty dollars per paycheck, but depending on how frequent the paycheck comes out, it can save forty to eighty dollars monthly. It’s also good to pay off personal debts, such as money that a friend loaned us as soon as possible. It doesn’t just keep our debt low, it acknowledges our friend’s financial help as well as their potential financial issues.
Nothing feels more horrible than a company representative calling about an overdue bill. It’s important, however, not to avoid these calls. Let the person on the other end know what your financial situation is. They may be able to grant you a grace period. Then pay the bill off as soon as possible. It’s not just financially healthy. It keeps the lights on and water running.
There are many deals out there for credit cards that include a limited amount of time without interest, but then the interest goes up quite a bit. Interest can be a financial killer. We always ended up owing at least 10-20% more than we borrowed. It may not sound like much, but it can add up when the money is borrowed to begin with. The first bills we tried to pay off were those that had a high interest rate. For us these were our credit cards. High interest items can also include mortgage and vehicle payments. It might be tight for a few months, but it’s well worth getting these items out of the way.
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